Downtown revitalization and economic recovery financing districts.

Assembly Member Haney's legislation expands California's downtown revitalization financing program beyond San Francisco, allowing any city or county to establish special districts that fund commercial-to-residential conversion projects through tax increment financing.

The bill authorizes local governments to create downtown revitalization and economic recovery financing districts that capture incremental property tax revenue from qualifying commercial-to-residential conversion projects. These districts must establish a governing board comprising three legislative body members and two public appointees. Property owners can opt in to receive tax increment funding before obtaining their first building permit, with revenues flowing back to specific projects for up to 30 years to finance development costs.

Projects receiving district funding must meet specific affordability requirements, with exceptions for the first 1.5 million square feet of conversions. Residential developments must reserve either 5% of rental units for very low-income households, 10% for lower-income households, or 10% of for-sale units for moderate-income households - or meet local inclusionary requirements if higher. The bill also requires prevailing wages and compliance with local labor standards for funded projects.

Districts must prepare detailed financing plans specifying project eligibility, revenue allocation formulas, and administrative cost limits. The plans require multiple public hearings before adoption and annual reporting to the Legislature on outcomes. While districts can operate for up to 45 years from their first revenue distribution, projects must opt in by December 2032 to receive funding. The legislation maintains existing protections for school funding and prior redevelopment obligations.